Every day, millions of people make all kinds of voluntary contributions to companies — from informed opinions to computing resources — that create tremendous value for those firms’ customers and, consequently, for their shareholders. User contributions are fueling some of the world’s fastest-growing and most competitively advantaged organizations — in some cases revolutionizing the economics of entire industries by radically shrinking their cost structures.
The challenge for executives is twofold: First, you must learn how to spot opportunities for creating value from user contributions. Second, in acting on these opportunities, you must overcome natural organizational resistance to the idea of relinquishing significant control to people outside the company.
Revolutionary potential, debilitating myths
Like book best-seller lists, rankings of the most popular Web sites reflect what’s winning the battle for people’s attention. The companies joining the list of most popular Web sites in recent years include Wikipedia, YouTube, Facebook, Craigslist and MySpace. All these site rely on — or are themselves — user contribution systems. Much of their success flows from inherent characteristics of contribution systems that create advantages, detailed here, of a magnitude rarely known in traditional business.
Cost advantage. These sites enjoy free “raw materials,” as users perform gratis work that companies typically have to pay for. People contribute for various reasons, some of them self-serving but all of them sufficient to make formal payment unnecessary.
Scalability advantage. Inexpensive does not mean incomplete. Wikipedia has 10 times as many articles as Encyclopedia Britannica, and eBay’s virtual shelves feature 120 million items, many times more than any other store on the planet can offer. Such scale doesn’t require broad or deep contribution: Only a small percentage of users may contribute (about one user in 1,000 for Wikipedia) and active contributions may require little effort.
Competitive advantage. Some contribution systems give companies a structural advantage over rivals — the more people who contribute to the system, the more useful it becomes, creating an upward spiral in which increasingly more people choose to use and contribute to it.
Where can contribution systems help my company?
Let’s look at some of the different ways that traditional companies are employing user contribution systems in a wide variety of business activities and functions.
Customer service. Company-hosted online support forums, in which product users answer questions from other users free of charge, are commonplace, but troubleshooting is just one way to harness user contributions for service. Hyatt Hotels and Resorts has launched an online concierge service that aggregates and lets users rate travel tips posted by Hyatt’s customers and concierges. The aim is both to reduce the burden on concierges and to quickly provide travelers with tailored, extensive city information.
Marketing. The power of contribution systems is now being tapped by traditional marketing powerhouses. Procter & Gamble has created a Web site, BeingGirl, aimed at teen and preteen girls — a difficult group to reach in the marketing of its feminine-hygiene products because young girls are often uncomfortable viewing TV ads on the topic in the company of friends or family. But adding forums where girls could interact with one another allowed users to get support and advice from other girls. P&G says that as a marketing tool BeingGirl is now four times as effective as comparably priced television advertising.
Employee support. Most company intranet sites are one-way streets, with management broadcasting the “company line” to employees. Best Buy, the U.S. retail chain, uses the opposite approach in a contribution system dubbed BlueShirt Nation, which allows employees to share and discuss their ideas and experiences — what works and what doesn’t in carrying out a particular task or in interacting with customers, for example. The site, launched two years ago, has more than 20,000 registered employee users.
Capital resources. In Japan, Honda captures real-time traffic data from GPS systems that Honda owners buy from the company. Speed and location reports from each vehicle contribute to a data stream that Honda aggregates with other traffic data to provide information on traffic jams and other conditions to Honda drivers who subscribe to the company’s InterNavi service. Users benefit from enhanced traffic updates; the company can offer a superior subscription service without having to pay for the capital infrastructure.
Design and development. User contribution can tackle creative challenges from the technical to the artistic. The emblematic example of contribution in research and development is open source software, such as the Linux operating system and the Mozilla Foundation’s Firefox Web browser, which is created and regularly upgraded by communities of unpaid volunteer developers.
Production. In some cases, organizations can “delegate” some or all of the production process to users. Wikipedia delegates all of it.
How do I get my company started?
Want to lead your rivals? Here’s my advice for senior managers trying to create contribution systems in their companies:
– Use stories of personal experiences to move mindset. To overcome wariness in inexperienced executives, ask enthusiasts to share stories of their personal experience with user contribution systems. To build awareness, have people count the user contribution systems found on an Amazon page and classify them by type. (If you look hard, you’ll find 23 separate systems on a single Amazon product page.)
– Nurture small experiments. Encourage unofficial and “guerrilla” experiments. Most of the experiments will fail; tell the organization in advance that this is OK. Communicate the value of the lessons learned from those failed experiments so that other teams benefit.
– Let enthusiasts and young employees provide ideas and leadership. Expect ideas for contribution systems to emerge from those who use them the most. Have them develop prototypes and show them directly to you; then help them act on some of the ideas that emerge.
– Set boundaries but guarantee freedom within them. Make sure experimenters aren’t distracted by experts and that their experiments aren’t smothered by larger initiatives with broader mandates.
– Protect experiments from your company’s natural control instincts. Ceding some control of business processes to outsiders will be scary for your organization. Name a godfather or godmother with big-time clout to protect experiments and break through barriers when initiatives meet organizational resistance.
– Use your customer base to jump-start projects.
– Let users “vote,” early and often. Customers are better than executives at picking winners in this arena, so get experiments into the hands of real customers as quickly as possible.
– Seek organizational buy-in only after you’ve had some success. Ultimately, you want innovation in user contribution to become embedded in the organization’s normal processes, but you’ll most likely struggle to shift mindset until you can point to a successful experiment or two.
